DALLAS—Five years ago, Jon Daniels became the youngest general manager in the history of the game. He quickly was thrown into the fire, as his teams posted losing records over his first four seasons and he traded away Adrian Gonzalez and Chris Young for little return.

Daniels has emerged unscathed, as he not only rebuilt the Rangers into American League champions, but also did a masterful job of pushing for a pennant while saddled with the constraints of a team in bankruptcy.

Jon Daniels

For those reasons, Daniels is Baseball America's 2010 Major League Executive of the Year.

Here's a look at how Daniels and his staff of scouts constructed the AL champion Rangers despite having only a $55 million payroll:

Tear It Down, Build It Up

In May 2007, after a disastrous start, the Rangers went into "strategic teardown" mode—building from the bottom up and dismantling from the top down—for two reasons. They built through a big draft class that included five of the first 54 picks—a reward for making the right arbitration decisions and letting Carlos Lee, Gary Matthews and Mark DeRosa walk away.

Four of those five picks played a role with the Rangers in 2010. Julio Borbon (No. 35 overall) and Tommy Hunter (No. 54) have helped on the field. Blake Beavan (No. 17) and Michael Main (No. 24) were used in midseason trades for Cliff Lee and Bengie Molina. In addition, 17th-rounder Mitch Moreland, whom the Rangers took as much for his pitching ability as his hitting, saved the club with his mature approach at first base.

Including lefties Michael Kirkman (2005 draft) and Derek Holland (2006 draft-and-follow), 20 percent of the playoff roster was drafted and developed within the last five years. That picks from 2005 and 2006 are appearing on the roster in 2010 is right about on schedule for the typical player development process. The 2007 draft class helped the Rangers accelerate their rebuilding perhaps by as much as a full year.

The second part of the 2007 strategic teardown was to accelerate the rebuilding process by using attractive trade pieces to acquire talent at multiple levels.

In Mark Teixeira, the Rangers had the most desired trade commodity on the market. Outfielder Kenny Lofton and relievers Ron Mahay, Eric Gagne and Akinori Otsuka were also sought after as well. So Daniels sent his scouts out with an all-hands-on-deck effort and specific instructions.

" 'Now is not the time to be shy about taking risks,' " Daniels recalled telling his scouts. "By definition, these trades were going to be risks. We focused on high-ceiling players with athleticism that played premium positions, and pitching depth. We had all our pro scouts off their regular coverage and focusing on this. And a lot of our amateur scouts, too. To make this work, we needed impact players."

From those orders, the Rangers ended up targeting four clubs as possible matches for Teixeira: the Angels, Braves, Diamondbacks and Dodgers. The Braves won the Teixeira sweepstakes with the best mix of depth, sending Texas shortstop Elvis Andrus and closer Neftali Feliz. The Rangers also got outfielders David Murphy and Engel Beltre from the Red Sox. And had Otsuka not gotten hurt in July, the Rangers might have been able to parlay him into either Jair Jurrjens or Gorkys Hernandez from the Tigers.

After 2007, the Rangers and Reds took a bold step, with each team exchanging players with high ceilings. The Rangers traded their top young pitcher, Edinson Volquez, for center fielder Josh Hamilton., a blockbuster of a deal in retrosect. Today, that trade would be considered a blockbuster of epic proportions.

'What Do We Have To Lose?'

With limited financial resources, the Rangers have had to investigate all methods for acquiring players. They've made the most of this in the bullpen, which they filled with guys who were out of minor league options.

Perhaps the most creative acquisition was the selection of outfielder Alexi Ogando in the minor league phase of the 2005 Rule 5 draft. The Rangers saw Ogando as having a pitcher's body and a fantastic arm. They also knew he would be banned from the U.S. in 2006 for his role in a visa fraud scandal. They didn't know the ban would last five years.

Every time the Rangers thought Ogando's immigration situation was hopeless, another scout who had seen him pitching in the Dominican Republic would speak up.

"When we took him, we kind of had the approach, 'What do we have to lose?' " Daniels said. "(Director of personnel) A.J. Preller had seen him in the outfield, thought he had a great arm and the body of a pitcher. He was the kind of talent who would have been one of our top 10 prospects. He was just off the radar for a totally different reason."

Daniels' task last winter was simple, but hardly easy: finish off a contending club in free agency, but do so while shrinking the payroll. Somehow, the Rangers landed possibly the two best values on the market in Vladimir Guerrero and Colby Lewis. And Darren Oliver was no slouch in the bullpen. The money they guaranteed the trio was roughly equivalent to the 2010 salary of Kevin Millwood, whom they traded away to the Orioles.

The key was signing Lewis. The Rangers had pledged to annually produce at least one player from the Pacific Rim scouting operation they bolstered in 2009. While other clubs focused on scouting players with Japanese surnames, new Japan scout Joe Furokawa kept pushing the former Rangers prospect.

Furokawa had worked with the Hiroshima Carp, Lewis' team in Japan for two years. He thought Lewis' command and his breaking pitches had improved significantly. The Rangers sent three scouts to see Lewis and they came away with similar feelings and a specific plan for Lewis: He would be the guy, not Rich Harden, most capable of replacing Millwood's innings. The evaluation was spot on: For $1.75 million in 2010, Lewis gave the Rangers 201 innings. Millwood, who made $12 million in 2009, pitched 199 innings; he averaged 189 for his four years in Texas.

The Rangers ran into a potentially serious issue early in spring training as their depth of bench players threatened to collapse. But Daniels' scouts ended up finding catcher Matt Treanor and infielder Andres Blanco in the last week of camp. Both played larger-than-expected roles and gave the Rangers better-than-expected results.

Shortly after infielder Khalil Greene had to back out of his contract because of social anxiety disorder before camp ever began, the club started a procession of auditions with Hernan Irribarren (acquired from the Brewers) and Gregoria Petit (acquired from the A's). But all along, Texas had its eye on Blanco.

The Rangers were aware Blanco was out of options and might not make the Cubs roster. Daniels, who had seen Blanco as a 20-year-old make a couple of outstanding defensive plays against the Rangers, kept in contact with Chicago counterpart Jim Hendry, who essentially sold the infielder to the Rangers.

Depth And Dumb Luck

The Rangers were active from the moment the trading season unofficially began on July 1 until playoff rosters had to be set on Sept. 1. They got Molina to bolster their troubled catching situation on July 1 and Jeff Francoeur on Aug. 31 to give them a legitimate righthanded-hitting outfield option.

In between, there was the acquisition of some guy named Cliff Lee.

Having just hauled in another big draft class with five of the first 50 picks, the Rangers leveraged some of their previous draft classes to get the deals done. From the 2007 draft, the Rangers used Main (to acquire Molina), Beavan and Josh Lueke (Lee) and Evan Reed (Jorge Cantu). From 2008, they used Justin Smoak as the centerpiece of the Lee deal.

And then there was Nelson Cruz, whose spot on the club defies explanation. The Rangers, after all, bit down hard and were prepared to lose him on waivers at the end of spring training 2008. They opted to keep Jason Botts, and with Cruz out of options, exposed him to waivers. But they waited until the end of spring training, and other teams declined to take Cruz and shuffle their own rosters. It was a bad evaluation by the Rangers but good timing.

Cruz went back to the minors, opened his stance and returned late in August of that year. Over the last two years, the guy anybody could have had for a $20,000 waiver claim became an all-star who averages a homer every 15.74 at-bats—which ranks ninth among players with at least 1,000 plate appearances.

"I don't want to take credit for exposing an all-star to waivers," Daniels said. "But we took the approach that we were going to play things out until the end. We had exhausted all our minor league options, but we didn't want to walk away from the player. It was easier to try and sneak him through waivers when everybody's roster was set."